Would Hotelling Kill the Electric Car?
In this paper, we show that the potential for endogenous technological change in alternative energy sources may alter the behaviour of resource-owning firms. When technological progress in an alternative energy source can occur through learning-by-doing, resource owners face competing incentives to extract rents from the resource and to prevent expansion of the new technology. We show that in such a context, it is not necessarily the case that scarcity-driven higher traditional energy prices over time will induce alternative energy supply as resources are exhausted. Rather, we show that as we increase the learning potential in the substitute technology, lower equilibrium energy prices prevail and there may be increased resource extraction and greenhouse gas emissions. We show that the effectiveness and the incidence of emissions reduction policies may be altered by increased potential for technological change. Our results suggest that treating finite resource rents as endogenous consequences of both technological progress and policy changes will be important for the accurate assessment of climate change policy.
|Date of creation:||01 Apr 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (780) 492-3406
Fax: (780) 492-3300
Web page: http://www.economics.ualberta.ca/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lewis, Tracy R. & Schmalensee, Richard., 1979.
"On oligopolistic markets for nonrenewable natural resources,"
1052-79., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Lewis, Tracy R & Schmalensee, Richard, 1980. "On Oligopolistic Markets for Nonrenewable Natural Resources," The Quarterly Journal of Economics, MIT Press, vol. 95(3), pages 475-91, November.
- Popp, David, 2006. "ENTICE-BR: The effects of backstop technology R&D on climate policy models," Energy Economics, Elsevier, vol. 28(2), pages 188-222, March.
- Severin Boreinstein & Andrea Shepard, 1996.
"Dynamic Pricing in Retail Gasoline Markets,"
RAND Journal of Economics,
The RAND Corporation, vol. 27(3), pages 429-451, Autumn.
- Severin Borenstein & Andrea Shepard, 1993. "Dynamic Pricing in Retail Gasoline Markets," NBER Working Papers 4489, National Bureau of Economic Research, Inc.
- Borenstein, S. & Shepard, A., 1993. "Dynamic Pricing in Retail Gazoline Markets," Papers 93-22, California Davis - Institute of Governmental Affairs.
- McDonald, Alan & Schrattenholzer, Leo, 2001. "Learning rates for energy technologies," Energy Policy, Elsevier, vol. 29(4), pages 255-261, March.
- James L. Smith, 2009.
"World Oil: Market or Mayhem?,"
Journal of Economic Perspectives,
American Economic Association, vol. 23(3), pages 145-64, Summer.
- Daniel J.A. Johansson & Christian Azar & Kristian Lindgren & Tobias A. Persson , 2009. "OPEC Strategies and Oil Rent in a Climate Conscious World," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 23-50.
- Stiglitz, Joseph E, 1976. "Monopoly and the Rate of Extraction of Exhaustible Resources," American Economic Review, American Economic Association, vol. 66(4), pages 655-61, September.
- Christopher Harris & John Vickers, 1995. "Innovation and Natural Resources: A Dynamic Game with Uncertainty," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 418-430, Autumn.
- Crabbe, P. & Van Long, N., 1991.
"Entry Deterrence and Overexploitation of the Fishery,"
9101, University of Ottawa, Department of Economics.
- Crabbe, Philippe & Van Long, Ngo, 1993. "Entry deterrence and overexploitation of the fishery," Journal of Economic Dynamics and Control, Elsevier, vol. 17(4), pages 679-704, July.
- Crabbe, P. & Long, N.V., 1988. "Entry Deterrence And Overexploitation Of The Fishery," Working Papers 8804, University of Ottawa, Department of Economics.
- Long, Ngo Van & Sinn, Hans-Werner, 1985. "Surprise Price Shifts, Tax Changes and the Supply Behaviour of Resource Extracting Firms," Australian Economic Papers, Wiley Blackwell, vol. 24(45), pages 278-89, December.
- Sinn, Hans-Werner, 2008.
"Public policies against global warming: A supply side approach,"
Munich Reprints in Economics
19638, University of Munich, Department of Economics.
- Hans-Werner Sinn, 2008. "Public policies against global warming: a supply side approach," International Tax and Public Finance, Springer, vol. 15(4), pages 360-394, August.
- Charles F. Manson & Stephen Polasky, 1993.
"Entry Deterrence In The Commons,"
Boston College Working Papers in Economics
209, Boston College Department of Economics.
- William D. Nordhaus, 1973. "The Allocation of Energy Resources," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(3), pages 529-576.
- Salo, Seppo & Tahvonen, Olli, 2001. "Oligopoly equilibria in nonrenewable resource markets," Journal of Economic Dynamics and Control, Elsevier, vol. 25(5), pages 671-702, May.
- Cairns, Robert D. & Van Long, Ngo, 1991. "Rent seeking with uncertain opposition," European Economic Review, Elsevier, vol. 35(6), pages 1223-1235, August.
- Hubbard, R Glenn & Weiner, Robert J, 1991.
"Efficient Contracting and Market Power: Evidence from the U.S. Natural Gas Industry,"
Journal of Law and Economics,
University of Chicago Press, vol. 34(1), pages 25-67, April.
- R. Glenn Hubbard & Robert J. Weiner, 1990. "Efficient Contracting and Market Power: Evidence from the U.S. Natural Gas Industry," NBER Working Papers 3502, National Bureau of Economic Research, Inc.
- Leach, Andrew J., 2007.
"The climate change learning curve,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 31(5), pages 1728-1752, May.
- Kelly, David L. & Kolstad, Charles D., 1999. "Bayesian learning, growth, and pollution," Journal of Economic Dynamics and Control, Elsevier, vol. 23(4), pages 491-518, February.
- James L. Smith, 2003.
"Inscrutable OPEC? Behavioral Tests of the Cartel Hypothesis,"
0305, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- James L. Smith, 2005. "Inscrutable OPEC? Behavioral Tests of the Cartel Hypothesis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 51-82.
- Popp, David, 2004. "ENTICE: endogenous technological change in the DICE model of global warming," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 742-768, July.
- Kolstad, Charles D & Wolak, Frank A, Jr, 1983. "Competition in Interregional Taxation: The Case of Western Coal," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 443-60, June.
- Charles Mason & Stephen Polasky, 2002. "Strategic Preemption in a Common Property Resource: A Continuous Time Approach," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(3), pages 255-278, November.
- David Popp, 2006. "Comparison of Climate Policies in the ENTICE-BR Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 163-174.
- Chakravorty, Ujjayant & Nauges, Celine & Thomas, Alban, 2008. "Clean Air regulation and heterogeneity in US gasoline prices," Journal of Environmental Economics and Management, Elsevier, vol. 55(1), pages 106-122, January.
When requesting a correction, please mention this item's handle: RePEc:ris:albaec:2010_012. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Brenda Carrier)
If references are entirely missing, you can add them using this form.